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Arctic Imperative

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by Judith Curry

In my congressional testimony, I discussed the idea of climate change winners and losers.   In the Arctic, where climate is changing most rapidly, will there be winners or losers?

Arctic Climate Impact Assessment

The Arctic Climate Impact Assessment (ACIA) is a study describing the ongoing climate change in the Arctic and its consequences.The project was conducted under the auspices of the intergovernmental Arctic Council and the non-governmental International Arctic Science Committee. Three hundred scientists participated in the study over a span of three years.  The summary and synthesis are provided in chapter 18 of the main report, particularly section 18.2.2.

Another very interesting chapter in the ACIA report is Chapter 3: The Changing Arctic: Indigenous Perspectives.

Robert Corell’s statement provides a concise summary of the findings of the ACIAstudy, which is further summarized here by these seven points:

  1. Arctic climate is warming rapidly and much larger changes are expected
  2. Warming across the Arctic and its consequences are likely to have major implications for the entire world
  3. Climate-induced changes in Arctic landscapes are important to people and animals in terms of habitat, food, fuel, and culture. 
  4. Animal species diversity, ranges, and distributions are likely to change
  5. Thawing ground will disrupt transportation, buildings and other infrastructure
  6. Indigenous peoples and other residents of the Arctic are likely to face major impacts due to climate and other environmental changes.
  7. Climate change is occurring in the context of many other changes taking place in the Arctic. 

ACIA’s policy document is found here, not much there.

Subsequent to the ACIA report,  the World Wildlife Fund in 2008 produced a report, Arctic Climate Impact Science – An Update Since ACIA. 

Coping with a Changing Arctic

The Alaska Dispatch lays out what is at stake:

Alaskans have long been aware of the melting Arcticsea ice, but we are only now beginning to comprehend its sweeping and profound implications. The opening and commercialization of this new shipping gateway will likely transform life for western and northern Alaskan coastal residents over the coming decades. Many have an uneasy sense that change may be profound. And Alaskans must work together to take steps to make the most of the transformation, while still protecting our Native cultures and environment.

In short, all Alaskans, outside investors and government entities must become engaged, and they must do so soon. Otherwise, Russian ports, which are already well-positioned for expansion, could become the only ones servicing shipping through the Bering Strait. The ships will be built in Asia and northern Europe; the energy resources will be extracted from Canada; the offshore drilling in the Arctic will be done by Chinese oil and gas companies. How do we know this? Because it’s already starting to happen.

With seven nuclear-powered icebreakers, our Russian neighbors are assertively encouraging marine shipments to and from Asia and Europe and to destinations along its Arctic coast. Ship traffic through the Bering Strait is growing quickly. Yet the U.S. Coast Guard has only one working icebreaker on the water. Alaska has no deepwater port in the Arctic, and only two in the Aleutian Islands more than 800 miles to the south. Villages along the Bering and Chukchi seas are presently defenseless against the dangers that accompany increased shipping: fuel spills, pollution and accidents. The federal government seems unconvinced of the need to act – to designate the location of a Bering Sea deepwater port; to appropriate funds for icebreaker repairs; to have the US become a party to the Law of the Sea Conference; to negotiate bilateral shipping conventions with our Russian neighbors just 50 miles to the west across the Bering Strait.

Oil development has dominated the debate in Alaska for the last 30 years. Oil and gas and natural resources will always be the key to this state’s economic viability. But the Arctic coastline is a vast and almost uncharted territory with its own potential to drive economic development.   Melting ice is opening this region to development; the right kind of development will transform lives for future generations of young people. A thriving Alaska seaport or two along the Bering Sea will bring jobs to other coastal villages, and improve their sense of strategic value to the state and the nation.   

Time to ratify Law of the Sea?

From an article in the Alaska Dispatch:

The United Nations Convention on the Law of the Sea,  it’s at the heart of the very modern-day scramble over modern-day resources; namely, minerals, oil and gas. Lots of oil and gas, particularly in Arctic waters. The treaty, which sets the rules for ownership of the ocean and all of its bounty both above and below the seabed floor, has the potential to affect United States interests in the Gulf of Mexico, areas off the Pacific Northwest, and California.

But the largest spoils are guessed to be in the Arctic, where the U.S. Geological Survey estimates as much as a third of the world’s undiscovered natural gas and 13 percent of the world’s undiscovered oil, billions of barrels, may be in the offshore Arctic.

Supporters from all sides, from environmentalists to industry, say that if the U.S. doesn’t ratify the Law of the Sea — which is easier said than done given that ratifying a treaty requires a supermajority vote of 67 senators — the country stands to lose out on both potential riches and environmental protections.  

So far, the European Union and 160 nation states have ratified treaty. The U.S. is one of 18 countries that have not done so.

A warming Arctic climate has changed the political calculus, number one. The thawing Arctic Ocean is opening up shipping, tourism and oil exploration, with the eight countries bordering it all vying to claim that natural resource-rich territory lies within their respective “economic zones.” The big question is who has the right to the spoils. Enter the treaty, signatories to which are legally bound to the rules and regulations it creates.

Thanks in part to legislation passed by former U.S. Sen. Ted Stevens, the United States routinely claims special rights — particularly fishing and transportation rights — within 200 nautical miles of their coasts. These are called Exclusive Economic Zones. But the Law of the Sea treaty could extend those rights if a country can prove to the United Nations that the continental shelf — the underwater portion of the continent — extends beyond that limit. 

But opponents again portrayed the treaty as a means for the U.N. to regulate undiscovered resources, “restrict mineral development” and redistribute approved production in “economic zones” managed by an International Seabed Authority, headquartered in Jamaica. Signing on, these opponents said, would be akin to a “new global order.”

The Arctic Imperative Summit

From the Alaskan Dispatch:

This is why we at Alaska Dispatch Publishing are hosting the first-ever international summit on the subject in Alaska. Nearly two hundred leaders from around the world will gather to learn about the changing Arctic from the viewpoints of Alaska. They will tackle the region’s crosscutting topics — from Arctic shipping and navigation to energy and resource development. They will hear from village coastal residents directly and debate the issues with representatives of the international investment community, executives from the shipping and infrastructure sectors, federal and state policymakers, and many other interested parties. Alaska Dispatch has invited scientists, Native leaders, oil drillers, sea captains, politicians, investors and entrepreneurs to attend the gathering in Girdwood. 

The website for the Arctic Imperative summit is here.   Some of the invited speakers are advertised here:

with a full list here.  Videos of the talks and discussion can be found here.

$$$

“Arctic Imperative” concludes with investment discussion:

The “Arctic Imperative” conference concluded yesterday in Girdwood with talk of future investment options.  And at least one capitalist predicts the money will come, because the opportunities offered by withdrawing sea ice are too tempting to pass up.

From an article entitled “Wall Street and the Arctic Ocean“:

On June 22nd, a large man disembarked at the Barrow Airport. Scott Minard is the Chief Investment Officer and a Managing Partner at Guggenheim Partners, which has more than $100 billion in assets under supervision.

A passionate weight lifter, he made six stops in Alaska over the course of his five-day trip, folding his muscular 136-kilo body into a chair and listening intently to a variety of people including mayors, Native American elders, and oil company insiders. When I asked for his thoughts at the end of the trip, his face became very serious. “The sense of opportunity here reminds me of visiting China in the late 1980s.”

“Let’s call the Arctic ‘The Last Emerging Market.’” At the end of June, Carlyle Group co-founder David Rubenstein made this suggestion in an address at a symposium held in a suburb of Anchorage, Alaska’s largest city. He brought forward an idea for a partnership to build infrastructure such as large ports and roads in the Arctic Circle, which would bring together private investors and a $40 billion government fund controlled by the oil-enriched state.

Wall Street is enthusiastic, but there are many hurdles to cross in order to develop Alaska’s Arctic zone. One of them is the Convention on the Law of the Sea. Because the United States has not yet ratified the Convention, it can’t claim a 200 nautical mile-wide Exclusive Economic Zone that would begin at its shores. In May, President Obama announced a policy that would expand oil exploration in Alaska, but he made no reference to the Convention and has set no goal to ratify it.

Environmental issues also cause difficulty. Environmental groups and Native Americans who depend on whaling and other marine life are very concerned about the risk of spills should offshore fields be developed. Royal Dutch Shell, which won a bid to mine the Alaskan sea in 2008, has still not gained the permit to begin digging.

Even so, Minard says that investing domestically has its appeal, since the risks that accompany investment in other emerging markets are absent. “The payback is huge,” he says, so it merits a long-term effort.

The Guggenheim family, which founded Guggenheim Partners, actually has a deep connection with Alaska. At the beginning of the 20th century, in the heat of the gold rush, they formed a syndicate with the Morgan family and used private capital to build railroads between the inland copper and gold mines and the ports in the south. These railroads were later replaced by state-run Alaska Railroad, but they contributed to the economic development of the region.

After a hiatus of 100 years, Wall Street and the Arctic are once again drawing closer. In this northern region, where Wall Streets’ “animal spirits” meet the frontier spirit, the source of America’s vitality still lives and breathes.

Senate Hearing

There was a recent hearing in the Senate Committee on Commerce, Science & Transportation on “Defending U.S. Economic Interests in the Changing Arctic:  Is there a Strategy?”  From the majority statement by Senator Rockefeller:

From the Aleutian Islands to Barrow, Alaska, ocean ecosystems are shifting due to a combination of Arctic warming, large natural variability, and sensitivity to changing sea ice conditions.  These changes, combined with new technologies are opening new possibilities for a variety of increased human activity in the Arctic, including ocean shipping, oil and gas development, mineral ore extraction, commercial fishing, and tourism. 

We have enduring national and strategic interests in both Polar Regions, but particularly in the Arctic Region where we have U.S. citizens and territory to protect.  Greater human activity in the Arctic will only increase the need for us to assert our presence and leadership in order to shape the evolving security, economic, scientific, and international political issues of the region.  

Already, the other Arctic nations—Canada, Denmark, Norway, and Russia—are scrambling to take advantage of economic opportunities in the Arctic.  Meanwhile, the U.S. seems to be standing idly by and content to watch the action from the sidelines.

Other Arctic nations have ratified the United Nations Convention on the Law of the Sea.  Meanwhile, the Senate has been sitting on the treaty for years.

Other Arctic nations—and even non-Arctic nations such as China—either have or are building icebreakers to transit Arctic waters.  Meanwhile, the U.S. has a pile of studies concluding we should be equipping the Coast Guard with the same capabilities, but we’re not—although Senator Begich, Senator Cantwell, and I keep trying.

I’ve said it before and I’ll say it again: As a nation, we depend on the Coast Guard to keep us safe and secure, but their ability to do that rests on their access to resources and other support necessary to perform their missions. 

Witnesses testifying were:

Unaami

The word Unaami derives from the Yup’ik word for “tomorrow,” with a connotation of change.  There is no question that the Arctic is changing, not just the climate but there is a host of additional socioeconomic factors.  The Arctic Imperative Summit is a fascinating example of adaptive governance, a grass roots effort initiated by a local newspaper that is bringing together  government officials from local to international, industry from the oil titans to local whaling captains, investors and environmental groups.  Back to the question:  In the Arctic, where climate is changing most rapidly, will there be winners or losers?  The process put into action by the Arctic Imperative Summit is stacking the deck in favor of “winners.”


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